Ditto this. My parents retired to a rural part of West Virginia and when my mom fell seriously ill in 2015, high end help was a long way away.
I got them to move back to a small town on Maryland’s eastern shore, which had a pretty good medical community.
And rural health care isn’t getting better.
Right around the time I was thinking about moving when I retired, I spent a weekend at a family reunion in upstate NY. Someone needed an ambulance, which took over half an hour to arrive. The ride to the hospital was nearly an hour. That was the end of considering rural areas - it’s one thing to be an hour away from my doctor. I can live with that. An hour away from a hospital by ambulance scares this city girl.
If you’re prosperous enough, you might encourage your kids to save more for retirement by offsetting the contributions with the same in cash gifts.
As for this, there are rules about how much highly compensated employees can contribute compared to that from less compensated employees.
Exactly. So company executives who want to save more have an incentive to encourage lower-level employees to do so.
I’ve debated making contributions to our daughter’s IRA on her behalf. Once we get our finances a little more settled (we have more credit card debt than I’d like due to supporting the parents), I likely will do just that.
Double-ditto.
We’re in an area where there are a number of very good hospitals within a half hour drive, and some world leaders not that much further. Moving elsewhere would, at a minimum, involve establishing new medical relationships. I’ve joked about moving to near where our daughter lives in Vermont, but there is ONE hospital in her town (albeit a decent one, with some doctors there affiliated with Dartmouth); a friend who lives elsewhere in Vermont says “everyone goes to Dartmouth”. Not a lot of other options; I mean, there are hospitals, but not a lot of choice nor best-in-field specialists. And Dartmouth is several hours drive away from most places in Vermont.
At least where my in-laws moved, there were plenty of options for medical care.
But finding a primary care doctor can be tricky anywhere. Where we are, a LOT of them are going concierge (including my 2 previous ones). I was at the office today and kept hearing the receptionist answer the phone with “The only doctor who is accepting new patients is doctor X and she’s booking appointments in May” (my doc is not accepting new ones; I guess I’m lucky we inherited each other 5 years ago). My daughter’s primary doc retired, and nobody else in that practice is accepting new patients, and my daughter does not drive.
I know nothing about either place, except that Snoopy’s brother lived in Needles. Just trying to pull a name out of thin air that i knew a) was in California, and b) was highly likely to have cheaper cost of living than LA.
The huge number of 100+ days would indeed be awful… but it’s a DRY heat, right? That makes ALL the difference, right? (uh, no; as a friend in AZ said, “If it’s 110 degrees out, it does not MATTER that it’s a ‘dry heat’”).
From irs.gov:
The contribution limit for employees who participate in 401(k), 403(b), and most 457 plans, as well as the federal government’s Thrift Savings Plan is increased to $23,000, up from $22,500.
The limit on annual contributions to an IRA increased to $7,000, up from $6,500.
When I was still employed, the contribution limit was not nearly this high on a 401k, so my employer set up another retirement-contribution vehicle. The contributions were tax-deferred, and the investment options were much the same as the 401k options. After retirement, the money is paid out over a 10-year period; 10% of the remaining funds are paid out each March.
I always have to wonder if people who say that have ever been somewhere hot and humid. Because while I can absolutely believe 110 degrees and dry is more uncomfortable than 90 degrees and humid, I’m certain that 90 and humid is worse than 90 and dry ( I’ve experienced both) . I think people who say “at least it’s dry” aren’t saying 110 and dry isn’t uncomfortable - they’re saying 110 and humid would be worse.
I think the point my friend was making was that, while dry heat is better than humid heat at the same temperature (as you note), when it’s 110+ it’s miserable (and dangerous) regardless of the humidity.
I’ve been in 95+ humid heat, and 95+ dry heat, and the dry is definitely more tolerable but neither feels great.
In 2010 we visited NV / UT / AZ. In July. I know, worst time to go, but it was a group thing. On our first full day, we stopped at Valley of Fire State Park. It was 110-115 degrees (that car’s air conditioning REALLY did the trick, though) so we only went on very short extravehicular excursions. At one point, a breeze cropped up - which would normally be a good thing (evaporates sweat, cools you) but as I noted at the time, “Now I know how food in a convection oven feels. It just cooks you that much faster”.
There’s also a cap on the combined total of the employee’s contribution and the employer’s contribution.
The 401(k) contribution limit for 2024 is $23,000 for employee contributions, and $69,000 for the combined employee and employer contributions.
This effectively does limit how much money can go into the 401K of a high-earning employee. If the employee hits their $23K limit, then the employer can only kick in a max of $46K. If that represents a 5% match from the employer, that means the employee’s salary is $920K. The vast majority of employees will not have to content with this limit.
Our CEO lives in Phoenix, and he responds to “but it’s a DRY heat” with “so’s the inside of an oven”.
Plus, the crime, gangs, and drug problems are all bad in the Needles area. I don’t want to call it a hell hole, exactly, but not somewhere I’d ever think of living if I didn’t have to.
I had the heaves, but they were the dry heaves.
Well, now, there you go: ad hoc post-retirement income, plus recreational opportunities!
More seriously, I know there are more affordable places to live in California than SF / LA / San Diego. I googled it, and Sacramento actually cropped up as a suggestion (along with a number of other places I was completely unfamiliar with). But the general advice for retirees, to consider moving to a cheaper place, is something to consider (albeit with plenty of drawbacks as well).
Interesting. I wasn’t familiar with the total contribution rule. Those employees must have a special deal that provides a GREAT DEAL more “matching” than rank-and-file people, or there are special bonuses that go directly into the 401(k), or it’s something only the CEO has to worry about.
An older employee doing the catchup contribution of 7,500 (total of 30,500) would thus get even less company contributions before hitting the 69K limit.
As you said, not something most of us have to worry about!
Spotted this article on retirement issues in the “lower middle class”:
If I may piggyback with another 401k question:
I know that everyone’s 401k is different and unique. That being said, is it safe to say that everyone will more or less experience a similar dose of the same thing in the same economy?
For instance, my 401k took a huge hit in 2020, the first year of the pandemic, and plummeted to half its value. Is it probable that everyone’s 401k took a similar hit?
Likewise, I’ve had a 22% increase in the value of my 401k in just the past four months alone without my putting a dime into the account, due to the soaring stock market. Is everyone’s 401k also experiencing a similar upswing?
It depends on how you allocated your 401K. I’m past that, and I moved a lot of my money to more stable income producing funds. I didn’t go down as much as the market during the down times, and I didn’t go up as much as the market during the up times. That’s fine with me. I was closer to market averages when I was working and had more aggressive investments, but they were still balanced which reduces the swing from fluctuations.
As @Voyager said, it’s certainly dependent on how you’ve invested your 401k funds. If you had put them all in low-risk vehicles like money market funds or CDs, you won’t be affected by the downturns, but you also won’t benefit from the upturns.
But in answer to your question, I suspect (without evidence) that many people put their 401k funds into a target retirement fund, which is a fund that’s professionally managed to initially invest in index funds that match the market, and then shift the asset allocation to more conservative mixes as one gets closer to retirement. If that’s the case, then, yes, a majority of people will feel the pains and gains of the market.
I lost about 40% of my 401k value in 2008, but had gained it back and much, much more by the time I retired in 2016, (Thanks, Obama!) And it has continued to climb in the years since retirement.
Most people have some type of deferred tax deduction set up at work. Mine is through TIAA/Fidelity. There are limits on how much can be deducted. There’s also a lifetime limit set by the IRS. That’s usually a concern for people with large incomes.
Tax Deferred Investment accounts can be set up through a company like Wells Fargo.
It can be difficult for family’s on tight budgets. That’s why a set payroll deduction is easier. You never have that money to spend. The family budget is based on take home pay.
I would urge people to begin contributing to a retirement plan early in their careers. It’s easier to make small deductions over 35 years.
I know it’s different working for a small business. Their pension plans may not be financially secure.